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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-38675
Elastic N.V.
 The Netherlands
(State or other jurisdiction of
incorporation or organization)
Not Applicable
(I.R.S. Employer
Identification No.)
800 West El Camino Real, Suite 350
Mountain View, California 94040
(Address of principal executive offices)
(650) 458-2620
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Ordinary shares, Par Value €0.01 Per Share   ESTC   New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer     
Accelerated filer
 
Non-accelerated filer
    
Smaller reporting company
 
        Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
As of February 28, 2022, the registrant had 93,468,991 ordinary shares, €0.01 par value per share, outstanding.


Table of Contents
 
    Page
 
3
 
PART I.
5
   
Item 1.
5
 
5
 
6
 
7
 
8
 
 
Item 2.
Item 3.
Item 4.
   
PART II.
   
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

2

NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risk and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit or gross margin, operating expenses (which include changes in sales and marketing, research and development and general and administrative expenses), and our ability to achieve and maintain future profitability;
our ability to continue to deliver and improve our offerings and successfully develop new offerings, including hosted offerings and security-related product offerings;
customer acceptance and purchase of our existing offerings and new offerings, including the expansion and adoption of our hosted offerings;
the impact of Russia’s invasion of Ukraine on the businesses of our customers and partners, including their spending priorities;
the impact of the 2019 coronavirus disease, including any current and future variants thereof (“COVID-19”), on our business, operations, hiring and financial results, and on the businesses of our customers and partners, including their spending priorities, the effect of governmental lockdowns, restrictions, new regulations and vaccine distribution and efficacy;
the impact of changes to our licensing of our products, specifically Elasticsearch and Kibana;
our assessments of the strength of our solutions and products;
our service performance and security, including the resources and costs required to prevent, detect and remediate potential security breaches or incidents, including by bad actors;
our ability to maintain and expand our user and customer base;
the market for our products continuing to develop;
competition from other products and companies with more resources, recognition and presence in our industry;
the impact of foreign currency exchange rate and interest rate fluctuations on our results;
the pace of change and innovation in the markets in which we participate and the competitive nature of those markets;
our business strategy and our plan to build our business;
our ability to effectively manage our growth, including any changes to our pace of hiring;
our international expansion strategy;
our operating results and cash flows;
our strategy of acquiring complementary businesses and our ability to successfully integrate acquired businesses and technologies;
the impact of acquisitions on our future product offerings;
our beliefs and objectives for future operations;
our relationships with and reliance on third parties, including partners;
our ability to protect our intellectual property rights;
our ability to develop our brands;
the impact of expensing stock options and other equity awards;
the sufficiency of our capital resources;
our ability to successfully defend litigation brought against us;
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our ability to successfully execute our go-to-market strategy, including the positioning of our solutions and products, and expand in our existing markets and into new markets;
sufficiency of cash to meet cash needs for at least the next 12 months;
our ability to comply with laws and regulations that currently apply or become applicable to our business both in the United States and internationally;
our ability to attract and retain qualified employees and key personnel;
our ability to onboard, provide training to and integrate new employees;
the effect of the loss of key personnel;
our expectations about the impact of natural disasters and public health epidemics and pandemics, on our business, results of operations and financial condition;
expectations about seasonality;
the future trading prices of our ordinary shares;
our ability to service our debt obligations; and
general market, political, economic and business conditions (including developments and volatility arising from the ongoing COVID-19 pandemic and the ongoing military conflict between Russia and Ukraine).
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. Any additional or unforeseen effect from the ongoing COVID-19 pandemic may exacerbate these risks. We cannot assure that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q or to conform such statements to actual results or revised expectations, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.
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PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Elastic N.V.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
(unaudited)
  As of
January 31, 2022
As of
April 30, 2021
Assets
Current assets:
Cash and cash equivalents $ 864,363  $ 400,814 
Restricted cash 3,928  2,894 
Accounts receivable, net of allowance for credit losses of $2,729 and $2,344 as of January 31, 2022 and April 30, 2021, respectively
146,218  160,415 
Deferred contract acquisition costs 38,938  36,089 
Prepaid expenses and other current assets 39,405  37,002 
Total current assets 1,092,852  637,214 
Property and equipment, net 6,739  8,881 
Goodwill 304,155  198,851 
Operating lease right-of-use assets 21,454  25,464 
Intangible assets, net 49,948  36,286 
Deferred contract acquisition costs, non-current 62,980  50,263 
Deferred tax assets 3,765  3,697 
Other assets 17,403  12,516 
Total assets $ 1,559,296  $ 973,172 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable $ 21,792  $ 7,248 
Accrued expenses and other liabilities 42,110  28,909 
Accrued compensation and benefits 56,181  52,525 
Operating lease liabilities 8,983  8,528 
Deferred revenue 362,287  352,805 
Total current liabilities 491,353  450,015 
Deferred revenue, non-current 33,395  44,895 
Long-term debt, net 566,271  — 
Operating lease liabilities, non-current 14,879  19,649 
Other liabilities, non-current 21,089  7,782 
Total liabilities 1,126,987  522,341 
Commitments and contingencies (Note 8 and 9)
Shareholders’ equity:
Convertible preference shares, €0.01 par value; 165,000,000 shares authorized, 0 shares issued and outstanding as of January 31, 2022 and April 30, 2021
—  — 
Ordinary shares, par value €0.01 per share: 165,000,000 shares authorized; 93,420,927 and 90,533,985 shares issued and outstanding as of January 31, 2022 and April 30, 2021, respectively
982  948 
Treasury stock (369) (369)
Additional paid-in capital 1,197,570  1,071,675 
Accumulated other comprehensive loss (14,318) (8,105)
Accumulated deficit (751,556) (613,318)
Total shareholders’ equity 432,309  450,831 
Total liabilities and shareholders’ equity $ 1,559,296  $ 973,172 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Elastic N.V.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
(unaudited)
  Three Months Ended January 31, Nine Months Ended January 31,
  2022 2021 2022 2021
Revenue
License - self-managed $ 20,119  $ 15,280  $ 54,457  $ 45,673 
Subscription - self-managed and SaaS 189,495  131,969  522,599  357,127 
Total subscription revenue 209,614  147,249  577,056  402,800 
Professional services 14,330  9,866  45,963  28,079 
Total revenue 223,944  157,115  623,019  430,879 
Cost of revenue
Cost of license - self-managed 501  346  1,242  1,039 
Cost of subscription - self-managed and SaaS 47,076  31,426  126,097  86,464 
Total cost of revenue - subscription 47,577  31,772  127,339  87,503 
Cost of professional services 13,707  10,196  37,491  27,744 
Total cost of revenue 61,284  41,968  164,830  115,247 
Gross profit 162,660  115,147  458,189  315,632 
Operating expenses
Research and development 71,749  51,400  194,894  143,766 
Sales and marketing 105,069  71,087  288,055  191,712 
General and administrative 31,691  27,121  89,298  72,555 
Total operating expenses 208,509  149,608  572,247  408,033 
Operating loss (45,849) (34,461) (114,058) (92,401)
Other income (expense), net
Interest expense (6,175) (65) (14,327) (78)
Other income (expense), net (861) (2,312) (509) 8,502 
Loss before income taxes (52,885) (36,838) (128,894) (83,977)
Provision for income taxes 3,841  1,136  9,344  2,156 
Net loss $ (56,726) $ (37,974) $ (138,238) $ (86,133)
Net loss per share attributable to ordinary shareholders, basic and diluted $ (0.61) $ (0.43) $ (1.50) $ (1.00)
Weighted-average shares used to compute net loss per share attributable to ordinary shareholders, basic and diluted 93,015,185  88,341,038  92,140,919  86,296,028 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Elastic N.V.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
  Three Months Ended January 31, Nine Months Ended January 31,
  2022 2021 2022 2021
Net loss $ (56,726) $ (37,974) $ (138,238) $ (86,133)
Other comprehensive loss:
Foreign currency translation adjustments (4,937) 3,346  (6,213) (7,190)
Other comprehensive loss (4,937) 3,346  (6,213) (7,190)
Total comprehensive loss $ (61,663) $ (34,628) $ (144,451) $ (93,323)
 The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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Elastic N.V.
Condensed Consolidated Statements of Shareholders’ Equity
(in thousands, except share data)
(unaudited)
        Additional Paid-in Capital Accumulated Other Comprehensive Loss   Total Shareholders' Equity
  Ordinary Shares Treasury Shares Accumulated Deficit
  Shares Amount
Balances at October 31, 2021 92,566,025  $ 972  $ (369) $ 1,153,408  $ (9,381) $ (694,830) $ 449,800 
Issuance of ordinary shares upon exercise of stock options 473,442  —  6,703  —  —  6,709 
Issuance of ordinary shares upon release of restricted stock units 381,460  —  (4) —  —  — 
Stock-based compensation —  —  —  37,463  —  —  37,463 
Net loss —  —  —  —  —  (56,726) (56,726)
Foreign currency translation —  —  —  —  (4,937) —  (4,937)
Balances at January 31, 2022 93,420,927  $ 982  $ (369) $ 1,197,570  $ (14,318) $ (751,556) $ 432,309 
Additional Paid-in Capital Accumulated Other Comprehensive Loss Total Shareholders' Equity
Ordinary Shares Treasury Shares Accumulated Deficit
Shares Amount
Balances at October 31, 2020 87,204,991  $ 908  $ (369) $ 986,076  $ (11,914) $ (532,043) $ 442,658 
Issuance of ordinary shares upon exercise of stock options 2,157,149  26  —  22,298  —  —  22,324 
Issuance of ordinary shares upon release of restricted stock units 282,800  —  (3) —  —  — 
Stock-based compensation —  —  —  25,227  —  —  25,227 
Net loss —  —  —  —  —  (37,974) (37,974)
Foreign currency translation —  —  —  —  3,346  —  3,346 
Balances at January 31, 2021 89,644,940  $ 937  $ (369) $ 1,033,598  $ (8,568) $ (570,017) $ 455,581 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Elastic N.V.
Condensed Consolidated Statements of Shareholders’ Equity
(in thousands, except share data)
(unaudited)
Additional Paid-in Capital Accumulated Other Comprehensive Loss Total Shareholders' Equity
Ordinary Shares Treasury Shares Accumulated Deficit
Shares Amount
Balances at April 30, 2021 90,533,985  948  (369) 1,071,675  (8,105) (613,318) 450,831 
Fair value of replacement equity awards attributable to pre-acquisition service —  —  —  1,266  —  —  1,266 
Issuance of ordinary shares upon exercise of stock options 2,004,188  24  —  27,516  —  —  27,540 
Issuance of ordinary shares upon release of restricted stock units 882,754  10  —  (10) —  —  — 
Stock-based compensation —  —  —  97,123  —  —  97,123 
Net loss —  —  —  —  —  (138,238) (138,238)
Foreign currency translation —  —  —  —  (6,213) —  (6,213)
Balances at January 31, 2022 93,420,927  $ 982  $ (369) $ 1,197,570  $ (14,318) $ (751,556) $ 432,309 
Additional Paid-in Capital Accumulated Other Comprehensive Loss Total Shareholders' Equity
Ordinary Shares Treasury Shares Accumulated Deficit
Shares Amount
Balances at April 30, 2020 82,856,978  $ 856  $ (369) $ 898,788  $ (1,377) $ (484,251) $ 413,647 
Cumulative effect of accounting change —  —  —  —  —  367  367 
Issuance of ordinary shares upon exercise of stock options 6,192,264  73  —  67,481  —  —  67,554 
Issuance of ordinary shares upon release of restricted stock units 595,698  —  (8) —  —  — 
Stock-based compensation —  —  —  64,634  —  —  64,634 
Reclassification of liability-classified awards —  —  —  2,703  —  —  2,703 
Net loss —  —  —  —  —  (86,133) (86,133)
Foreign currency translation —  —  —  —  (7,191) —  (7,191)
Balances at January 31, 2021 89,644,940  $ 937  $ (369) $ 1,033,598  $ (8,568) $ (570,017) $ 455,581 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Elastic N.V.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
Nine Months Ended January 31,
  2022 2021
Cash flows from operating activities
Net loss $ (138,238) $ (86,133)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation and amortization 14,558  12,856 
Amortization of deferred contract acquisition costs 43,373  28,455 
Amortization of debt issuance costs 554  — 
Non-cash operating lease cost 6,259  5,256 
Stock-based compensation expense, net of amounts capitalized 96,971  65,305 
Deferred income taxes (219) (288)
Foreign currency transaction (gain) loss 1,707  (9,463)
Other 98  11 
Changes in operating assets and liabilities:
Accounts receivable, net 9,801  15,246 
Deferred contract acquisition costs (61,234) (54,612)
Prepaid expenses and other current assets (2,650) 4,817 
Other assets (803) 5,237 
Accounts payable 14,452  (6,321)
Accrued expenses and other liabilities 17,539  1,696 
Accrued compensation and benefits 4,686  (5,859)
Operating lease liabilities (6,438) (5,402)
Deferred revenue 8,306  53,309 
Net cash provided by operating activities 8,722  24,110 
Cash flows from investing activities
Purchases of property and equipment (987) (2,732)
Capitalization of internal-use software (4,227) — 
Business acquisitions, net of cash acquired (119,854) — 
Other —  1,320 
Net cash used in investing activities (125,068) (1,412)
Cash flows from financing activities
Proceeds from the issuance of debt 575,000  — 
Proceeds from issuance of ordinary shares upon exercise of stock options 27,540  67,554 
Payments of debt issuance costs (9,283) — 
Net cash provided by financing activities 593,257  67,554 
Effect of exchange rate changes on cash, cash equivalents, and restricted cash (12,328) 5,848 
Net increase in cash, cash equivalents, and restricted cash 464,583  96,100 
Cash, cash equivalents, and restricted cash, beginning of period 403,708  299,389 
Cash, cash equivalents, and restricted cash, end of period $ 868,291  $ 395,489 
Supplemental disclosures of cash flow information
Cash paid for interest $ 12,785  $ — 
Cash paid for operating lease liabilities $ 7,346  $ 6,628 
Cash paid (refund received) for income taxes $ 3,059  $ (1,217)
Supplemental disclosures of non-cash investing and financing information
Property and equipment included in accounts payable $ 30  $ 175 
Acquisition-related indemnity holdback $ 6,000  $ — 
Operating lease right-of-use assets for new lease obligations $ 2,440  $ 1,120 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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Elastic N.V.
Notes to Condensed Consolidated Financial Statements
(unaudited)
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1.Organization and Description of Business
Elastic N.V. (“Elastic” or the “Company”) was incorporated under the laws of the Netherlands in 2012. Elastic is a search company. It created the Elastic Stack, a powerful set of software products that ingest and store data from any source and in any format, and perform search, analysis, and visualization in milliseconds or less. Developers build on top of the Elastic Stack to apply the power of search to their data and solve business problems. The Company also offers software solutions built on the Elastic Stack: Enterprise Search, Observability, and Security. The Elastic Stack and the Company’s solutions are designed to run in public or private clouds, in hybrid environments, or in traditional on-premises environments.

2.Summary of Significant Accounting Policies
Basis of Presentation
The accompanying interim condensed consolidated balance sheet as of January 31, 2022, the interim condensed consolidated statements of operations and of comprehensive loss, interim condensed statements of shareholders’ equity for the three and nine months ended January 31, 2022 and 2021 and the interim condensed consolidated statements of cash flows for the nine months ended January 31, 2022 and 2021, are unaudited. These interim condensed consolidated financial statements have been prepared on a basis consistent with the annual consolidated financial statements and, in the opinion of management, include all adjustments necessary to fairly state the Company’s financial position as of January 31, 2022, and the results of the Company’s operations, its statements of shareholders’ equity for the three and nine months ended January 31, 2022 and 2021, and its statements of cash flows for the nine months ended January 31, 2022 and 2021. The financial data and other financial information disclosed in the notes to these interim condensed consolidated financial statements related to the three and nine month periods are also unaudited. The results for the nine months ended January 31, 2022 are not necessarily indicative of the operating results expected for the fiscal year ending April 30, 2022, or any future period.
The unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the financial statements of the Company and its wholly-owned subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation.
Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Therefore, these unaudited interim condensed consolidated financial statements and accompanying footnotes should be read in conjunction with the Company’s annual consolidated financial statements and related footnotes included in the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2021 filed with the SEC on June 25, 2021 (“the Company's Annual Report on Form 10-K”).
Fiscal Year
The Company’s fiscal year ends on April 30. References to fiscal 2022, for example, refer to the fiscal year ending April 30, 2022.
Use of Estimates and Judgments
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Such estimates include, but are not limited to, allocation of revenue between recognized and deferred amounts, deferred contract acquisition costs, allowance for credit losses, valuation of stock-based compensation, fair value of ordinary shares in periods prior to the Company’s initial public offering, fair value of acquired intangible assets and goodwill, useful lives of acquired intangible assets and property and equipment, whether an arrangement is or contains a lease, the discount rate used for operating leases and valuation allowance for deferred income taxes. The Company bases these estimates on historical and anticipated results, trends and various other assumptions that it believes are reasonable under the circumstances, including assumptions as to future events.
In March 2020, the World Health Organization declared COVID-19 a pandemic. The pandemic has resulted in a global slowdown of economic activity that is likely to decrease demand for a broad variety of goods and services, including from certain of the Company’s customers, while also disrupting sales channels and marketing activities for an unknown period of time. The full extent to which COVID-19 may impact the Company’s financial condition or results of operations is uncertain.
Estimates and assumptions about future events and their effects cannot be determined with certainty and therefore require the exercise of judgment. As of the date of issuance of these financial statements, the Company is not aware of any
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specific event or circumstance that would require the Company to update its estimates, judgments or revise the carrying value of the Company’s assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ from those estimates and any such differences may be material to the Company’s financial statements.
Significant Accounting Policies
Other than as described below, there have been no changes to the Company’s significant accounting policies described in the Company’s Annual Report on Form 10-K that have had a material impact on its consolidated financial statements and related notes.
Debt Issuance Costs
Costs incurred in connection with the issuance of debt are deferred and amortized as interest expense over the term of the related debt using the effective interest method. To the extent that the debt is outstanding, these amounts are reflected in the consolidated balance sheets as direct deductions from the carrying amount of the outstanding borrowings.
Recently Adopted Accounting Pronouncements
Income Taxes:  In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, eliminating certain exceptions to the general principles in ASC 740 related to intra-period tax allocation, deferred tax liability and general methodology for calculating income taxes. Additionally, the ASU makes other changes for matters such as franchise taxes that are partially based on income, transactions with a government that result in a step up in the tax basis of goodwill, separate financial statements of legal entities that are not subject to tax, and enacted changes in tax laws in interim periods. The new guidance becomes effective for the Company for the fiscal year ending April 30, 2022. Early adoption is permitted. The Company’s adoption of this ASU had no material impact on the Company’s condensed consolidated financial statements.
New Accounting Pronouncements Not Yet Adopted
Acquisitions:  In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, improving consistency in accounting for acquired revenue contracts with customers in a business combination by requiring that acquirers apply ASC Topic 606 to recognize contract assets and contract liabilities as if it had originated the contracts. If the acquiree prepared its financial statements in accordance with GAAP, the resulting acquired contract assets and liabilities should generally be consistent with acquiree’s financial statements. The new guidance becomes effective for the Company for the fiscal year ending April 30, 2024. Early adoption is permitted. The Company does not expect the adoption of the new accounting standard to have a material impact on its consolidated financial statements.
3.Revenue and Remaining Performance Obligations
Disaggregation of Revenue
The following table presents revenue by product category (in thousands):
  Three Months Ended January 31, Nine Months Ended January 31,
  2022 2021 2022 2021
Amount % of
Total
Revenue
Amount % of
Total
Revenue
Amount % of
Total
Revenue
Amount % of
Total
Revenue
Elastic Cloud $ 80,402  36  % $ 44,929  29  % $ 210,963  34  % $ 114,984  27  %
Other subscription 129,212  58  % 102,320  65  % 366,093  59  % 287,816  66  %
    Total subscription revenue 209,614  94  % 147,249  94  % 577,056  93  % 402,800  93  %
Professional services 14,330  % 9,866  % 45,963  % 28,079  %
    Total revenue $ 223,944  100  % $ 157,115  100  % $ 623,019  100  % $ 430,879  100  %
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During the first quarter of fiscal 2022, the Company updated its disaggregation of revenue breakdown to present revenue by product category. The prior period presentation for the three and nine months ended January 31, 2021, has been updated to conform to the current period presentation.
Remaining Performance Obligations
As of January 31, 2022, the Company had $860.6 million of remaining performance obligations. As of January 31, 2022, the Company expects to recognize approximately 86% of its remaining performance obligations as revenue over the next 24 months and the remainder thereafter.
4.Fair Value Measurements
The Company measures financial assets and liabilities that are measured at fair value on a recurring basis at each reporting period using a fair value hierarchy that prioritizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
Financial Assets
The following table summarizes assets that are measured at fair value on a recurring basis as of January 31, 2022 and April 30, 2021 (in thousands):
 
January 31, 2022 Level 1 Level 2 Level 3 Total
Financial Assets:        
Cash and cash equivalents:        
Money market funds $ 559,337  $ —  —  $ 559,337 
Short-term bank deposit —  1,700  —  1,700 
Total $ 559,337  $ 1,700  $ —  $ 561,037 

April 30, 2021 Level 1 Level 2 Level 3 Total
Financial Assets:        
Cash and cash equivalents:        
Money market funds $ 175,007  —  —  $ 175,007 
The Company considers all highly liquid investments, including money market funds with an original maturity of three months or less at the date of purchase, to be cash equivalents. The Company uses quoted prices in active markets for identical assets to determine the fair value of its Level 1 investments in money market funds. The Company classifies its short-term bank deposit within Level 2 because they are valued using inputs other than quoted prices that are directly or indirectly observable in the market, including readily available pricing sources for the identical underlying security which may not be actively traded.
Financial Liabilities
In July 2021, the Company issued $575.0 million aggregate principal amount of 4.125% Senior Notes due July 15, 2029 (the “Senior Notes”) in a private placement. Based on the trading prices of the Senior Notes, the fair value of the Senior Notes as of January 31, 2022 was approximately $537.8 million. While the Senior Notes are recorded at cost, the fair value of the Senior Notes was determined based on quoted prices in markets that are not active; accordingly, the Senior Notes are categorized as Level 2 for purposes of the fair value measurement hierarchy.

5.Acquisitions
Nine months ended January 31, 2022
cmdWatch Security Inc.
On September 17, 2021, the Company acquired 100% of the share capital of cmdWatch Security Inc. (“Cmd”) for a total purchase consideration of $77.8 million. The purchase consideration includes an amount of $13.4 million which is being held in an indemnity escrow fund for 18 months after the acquisition close date. Pursuant to the merger agreement, Cmd’s vested stock options were paid in cash and unvested stock options held by Cmd employees were assumed by the Company. The fair value of the replacement equity awards associated with pre-acquisition service period of $4.3 million, consisting of
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$3.0 million paid in cash to vested option holders and $1.3 million of non-cash consideration, was included in the total purchase consideration. Approximately $6.6 million of the fair value of replacement equity awards was allocated to post-acquisition services that will be recognized as stock-based compensation expense over the remaining service period and was excluded from the total purchase consideration. Additionally, an amount of $6.5 million for post-combination services, which is payable at future dates upon completion of the underlying required service period, has been excluded from the purchase consideration. This amount will be recorded as a post-combination expense over the requisite service period.
The acquisition was accounted for as a business combination in accordance with ASC 805, Business Combinations, and accordingly, the total purchase consideration was allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date. The total preliminary purchase price allocated to developed technology and goodwill was $15.5 million and $59.0 million, respectively. The fair value assigned to developed technology was determined using the cost to recreate approach. The developed technology asset is being amortized on a straight-line basis over the useful life of 5 years, which approximates the pattern in which the developed technology is utilized. Goodwill resulted primarily from the expectation of enhancing the Company's current security solutions and is not deductible for income tax purposes.
Cmd has been included in the Company’s consolidated results of operations since the acquisition date. Pro forma and historical results of operations for this acquisition have not been presented because they were not material to the condensed consolidated results of operations.
Other Acquisitions
On September 2, 2021 and November 1, 2021, the Company acquired 100% of the share capital of Build Security Ltd. (“build.security”) and Optimyze.cloud Inc. (“Optimyze”), respectively, for a combined total purchase consideration of $57.2 million. The purchase consideration includes an amount of $5.4 million held in Indemnity escrow and $6.0 million held back by the Company for indemnity and will be released upon the 18-month anniversary of the respective acquisitions. These acquisitions were accounted for as business combinations. The total preliminary purchase price allocated to developed technology and goodwill was $9.8 million and $46.9 million, respectively. The developed technology intangible assets from these acquisitions are being amortized on a straight-line basis over a useful life of 5 years which approximates the pattern in which the respective developed technologies are utilized. Goodwill resulted primarily from the expectation of enhancing the Company's current security solutions and the value of the acquired workforce. This goodwill is not deductible for income tax purposes. Build.security and Optimyze have been included in the Company’s consolidated results of operations since their respective acquisition dates. Pro forma and historical results of operations for these acquisitions have not been presented because they were not material to the condensed consolidated results of operations.
Excluded from the combined purchase consideration from these two acquisitions is an amount of $6.3 million, payable in equal installments at the first and the second anniversary of each of the acquisitions, to certain employees of build.security and Optimyze. These amounts will be recorded as a post-combination expense over the requisite service periods.
The purchase price allocation for the acquisitions is preliminary and is based on the best estimates of management. The Company continues to collect information with regard to its estimates and assumptions, primarily related to intangible assets and certain tax-related, contingent liability and working capital items. The Company will record adjustments to the fair value of the assets acquired, liabilities assumed and goodwill within the 12 month measurement period, if necessary.
6.Balance Sheet Components
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
  As of
January 31, 2022
As of
April 30, 2021
Prepaid hosting costs $ 9,701  $ 11,122 
Prepaid software subscription costs 7,656  5,636 
Prepaid value added taxes 5,394  9,408 
Deposits 2,538  2,410 
Prepaid taxes 3,323  1,694 
Other 10,793  6,732 
Total prepaid expenses and other current assets $ 39,405  $ 37,002 
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 Property and Equipment, Net
The cost and accumulated depreciation of property and equipment were as follows (in thousands):
  Useful Life (in years) As of
January 31, 2022
As of
April 30, 2021
Leasehold improvements Lesser of estimated useful
life or remaining lease term
$ 10,740  $ 10,342 
Computer hardware and software 3 1,377  2,319 
Furniture and fixtures 3 - 5 5,418  5,971 
Assets under construction   345  707 
Total property and equipment   17,880  19,339 
Less: accumulated depreciation   (11,141) (10,458)
Property and equipment, net   $ 6,739  $ 8,881 
Depreciation expense related to property and equipment was $1.0 million and $0.8 million for the three months ended January 31, 2022 and 2021, respectively and $2.9 million and $2.2 million for the nine months ended January 31, 2022 and 2021, respectively.
Intangible Assets, Net
Intangible assets consisted of the following as of January 31, 2022 and April 30, 2021 (in thousands):
January 31, 2022 Gross Fair
Value
Accumulated
Amortization
Net Book
Value
Weighted
Average
Remaining
Useful Life
(in years)
Developed technology $ 70,130  $ 28,406  $ 41,724  3.5
Customer relationships 19,598  12,090  7,508  2.2
Trade names 2,872  2,160  712  2.2
Total $ 92,600  $ 42,656  49,944  3.3
Foreign currency translation adjustment
Total $ 49,948 
April 30, 2021 Gross Fair
Value
Accumulated
Amortization
Net Book
Value
Weighted
Average
Remaining
Useful Life
(in years)
Developed technology $ 44,830  $ 20,850  $ 23,980  3.3
Customer relationships 19,598  8,382  11,216  2.4
Trade names 2,872  1,780  1,092  2.4
Total $ 67,300  $ 31,012  36,288  3.0
Foreign currency translation adjustment (2)
Total $ 36,286 
Amortization expense for the intangible assets for the three and nine months ended January 31, 2022 and 2021 was as follows (in thousands):
  Three Months Ended January 31, Nine Months Ended January 31,
  2022 2021 2022 2021
Cost of revenue—cost of license—self-managed $ 501  $ 346  $ 1,242  $ 1,039 
Cost of revenue—cost of subscription—self-managed and SaaS 2,545  1,764  6,314  5,289 
Sales and marketing 1,231  1,428  4,088  4,302 
Total amortization of acquired intangible assets $ 4,277  $ 3,538  $ 11,644  $ 10,630 
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The expected future amortization expense related to the intangible assets as of January 31, 2022 was as follows (in thousands, by fiscal year):
Remainder of 2022 $ 4,147 
2023 16,696 
2024 13,985 
2025 8,017 
2026 5,057 
2027 2,046 
Total $ 49,948 
Goodwill
The following table represents the changes to goodwill (in thousands):
  Carrying
Amount
Balance as of April 30, 2021 $ 198,851 
Additions from acquisitions 105,904 
Foreign currency translation adjustment (600)
Balance as of January 31, 2022 $ 304,155 
There was no impairment of goodwill during the nine months ended January 31, 2022 and 2021.
Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consisted of the following (in thousands):
  As of
January 31, 2022
As of
April 30, 2021
Accrued expenses $ 27,281  $ 12,772 
Value added taxes payable 5,258  8,493 
Accrued interest on Senior Notes 989  — 
Income taxes payable 3,519  1,596 
Other 5,063  6,048 
Total accrued expenses and other liabilities $ 42,110  $ 28,909 
Accrued Compensation and Benefits
Accrued compensation and benefits consisted of the following (in thousands):
  As of
January 31, 2022
As of
April 30, 2021
Accrued vacation $ 25,532  $ 24,078 
Accrued commissions 14,903  17,581 
Accrued payroll taxes and withholding taxes 10,367  5,522 
Other 5,379  5,344 
Total accrued compensation and benefits $ 56,181  $ 52,525 
Contract Balances
The timing of revenue recognition may differ from the timing of invoicing to customers. For annual contracts, the Company typically invoices customers at the time of entering into the contract. For multi-year agreements, the Company generally invoices customers on an annual basis prior to each anniversary of the contract start date. The Company records unbilled accounts receivable related to revenue recognized in excess of amounts invoiced as the Company has an unconditional right to invoice and receive payment in the future related to those fulfilled obligations. Invoicing customers prior to performance creates a contract liability, deferred revenue, which is recognized in accordance with the Company’s revenue recognition policy.
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The following table provides information about unbilled accounts receivable, deferred contract acquisition costs and deferred revenue from contracts with customers (in thousands):
  As of
January 31, 2022
As of
April 30, 2021
Unbilled accounts receivable, included in accounts receivable, net $ 7,305  $ 5,204 
Deferred contract acquisition costs $ 101,918  $ 86,352 
Deferred revenue $ 395,682  $ 397,700 
Deferred Contract Acquisition Costs
Deferred contract acquisition costs represent costs that are incremental to the acquisition of customer contracts, which consist mainly of sales commissions and associated payroll taxes. The Company determines whether costs should be deferred based on sales compensation plans, if the commissions are in fact incremental and would not have occurred absent the customer contract.
The Company periodically reviews the carrying amount of deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these deferred costs. The Company did not recognize any impairment of deferred contract acquisition costs during the nine months ended January 31, 2022.
The following table summarizes the activity of the deferred contract acquisition costs (in thousands):
  Nine Months Ended January 31,
  2022 2021
Beginning balance $ 86,352  $ 43,549 
Capitalization of contract acquisition costs 58,939  57,093 
Amortization of deferred contract acquisition costs (43,373) (28,455)
Ending balance $ 101,918  $ 72,187 
Deferred Revenue
Significant changes in the deferred revenue balances were as follows (in thousands):
  Nine Months Ended January 31,
  2022 2021
Beginning balance $ 397,700  $ 259,702 
Increases due to invoices issued, excluding amounts recognized as revenue during the period
312,581  274,292 
Increase from acquisition, net of revenue recognized 1,001  — 
Amounts transferred to deferred revenue from accrued expenses and other liabilities upon entering into contracts with customers, net of revenue recognized during the period
—  5,424 
Revenue recognized that was included in deferred revenue balance at beginning of period
(315,600) (205,408)
Ending balance $ 395,682  $ 334,010 
Allowance for Credit Losses
The following is a summary of the changes in the Company’s allowance for credit losses (in thousands):
Nine Months Ended January 31,
2022 2021
Beginning balance $ 2,344  $ 1,247 
Cumulative-effect adjustment from adoption of ASU 2016-13 —  (367)
Provision 2,449  3,441 
Write-offs (2,064) (2,490)
Ending balance $ 2,729  $ 1,831 
7.Senior Notes
In July 2021, the Company issued $575.0 million aggregate principal amount of 4.125% Senior Notes due July 15, 2029 in a private placement.
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Interest on the Senior Notes is payable semi-annually in arrears on January 15 and July 15 of each year, commencing on January 15, 2022. The Company received net proceeds from the offering of the Senior Notes of $565.7 million after deducting underwriting commissions of $7.2 million and incurred additional issuance costs of $2.1 million. Total debt issuance costs of $9.3 million are being amortized to interest expense using the effective interest method over the term of the Senior Notes. The Company may redeem the Senior Notes, in whole or in part, at any time prior to July 15, 2024 at a price equal to 100% of the principal amount thereof plus a “make-whole” premium and accrued and unpaid interest, if any. The Company may at its election redeem all or a part of the Senior Notes on or after July 15, 2024, on any one or more occasions, at the redemption prices set forth in the indenture governing the Senior Notes (the “Indenture”), plus, in each case, accrued and unpaid interest thereon, if any, to, but excluding, the applicable redemption date. In addition, at any time prior to July 15, 2024, the Company may on any one or more occasions redeem up to 40% of the aggregate principal amount of the Senior Notes outstanding under the Indenture with the net cash proceeds of one or more equity offerings at a redemption price equal to 104.125% of the principal amount of the Senior Notes then outstanding, plus accrued and unpaid interest thereon, if any, to, but excluding, the applicable redemption date. The Company may also at its election redeem the Senior Notes in whole, but not in part, at a price equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, if certain changes in tax law occur as set forth in the Indenture.
If the Company experiences a change of control triggering event (as defined in the Indenture), the Company must offer to repurchase the Senior Notes at a repurchase price equal to 101% of the principal amount of the Senior Notes to be repurchased, plus accrued and unpaid interest, if any, to the repurchase date.
The indenture governing the Senior Notes contain covenants limiting the Company’s ability and the ability of certain subsidiaries to create liens on certain assets to secure debt; grant a subsidiary guarantee of certain debt without also providing a guarantee of the Senior Notes; and consolidate or merge with or into, or sell or otherwise dispose of all or substantially all of its assets to, another person. These covenants are subject to a number of limitations and exceptions. Certain of these covenants will not apply during any period in which the notes are rated investment grade by Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services. As of January 31, 2022, the Company was in compliance with all of its financial covenants under the Indenture associated with the Senior Notes.
The net carrying amount of the Senior Notes was as follows:
As of
January 31, 2022
Principal $ 575,000 
Unamortized debt issuance costs (8,729)
Net carrying amount $ 566,271 
The following table sets forth the interest expense recognized related to the Senior Notes:
Nine Months Ended
January 31, 2022
Contractual interest expense $ 13,441 
Amortization of debt issuance costs 554 
Total interest expense related to the Senior Notes $ 13,995 
8.Commitments and Contingencies
Cloud Hosting Commitments
During the nine months ended January 31, 2022, there were no material changes, outside the ordinary course of business, to the Company’s contractual obligations and commitments reported in the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 2021. 
Letters of Credit
The Company had a total of $3.9 million in letters of credit outstanding in favor of certain landlords for office space as of January 31, 2022.
Legal Matters
From time to time, the Company has become involved in claims and other legal matters arising in the ordinary course of business. The Company investigates these claims as they arise. Although claims are inherently unpredictable, the Company is currently not aware of any matters that, if determined adversely to the Company, would individually or taken together have a material adverse effect on its business, results of operations, financial position or cash flows.
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The Company accrues estimates for resolution of legal and other contingencies when losses are probable and reasonably estimable.
Although the results of litigation and claims are inherently unpredictable, the Company does not believe that there were any matters under litigation or claims with a reasonable possibility of the Company incurring a material loss as of January 31, 2022.
Indemnification
The Company enters into indemnification provisions under its agreements with other companies in the ordinary course of business, including business partners, landlords, contractors and parties performing its research and development. Pursuant to these arrangements, the Company agrees to indemnify, hold harmless, and reimburse the indemnified party for certain losses suffered or incurred by the indemnified party as a result of the Company’s activities. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company believes the fair value of these agreements is not material. The Company maintains commercial general liability insurance and product liability insurance to offset certain of the Company’s potential liabilities under these indemnification provisions.
In addition, the Company indemnifies its officers, directors and certain key employees against certain liabilities that may arise as a result of their affiliation with the Company. To date, there have been no claims under any indemnification provisions.
9.Leases
The Company’s leases are composed of corporate office spaces under non-cancelable operating lease agreements that expire at various dates through 2025. The Company does not have any finance leases.
Lease Costs
Components of lease costs included in the condensed consolidated statement of operations were as follows (in thousands):
Three Months Ended January 31, Nine Months Ended January 31,
  2022 2021 2022 2021
Operating lease cost $ 2,432  $ 2,234  $ 7,203  $ 6,518 
Short-term lease cost 581  507  1,571  1,859 
Variable lease cost 297  182  804  471 
Total lease cost $ 3,310  $ 2,923  $ 9,578  $ 8,848 
 
Lease term and discount rate information are summarized as follows:
  As of January 31, 2022
Weighted average remaining lease term (years) 3.17
Weighted average discount rate 4.85  %
 
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Future minimum lease payments under non-cancelable operating leases on an undiscounted cash flow basis as of January 31, 2022 were as follows (in thousands):
Years Ending April 30,  
2022 (remaining three months) $ 2,516 
2023 8,720 
2024 6,666 
2025 5,104 
2026 2,803 
Total minimum lease payments 25,809 
Less imputed interest (1,947)
Present value of future minimum lease payments 23,862 
Less current lease liabilities (8,983)
Operating lease liabilities, non-current $ 14,879 
10.Ordinary Shares
Each holder of ordinary shares has the right to one vote per ordinary share. The holders of ordinary shares are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors, subject to the prior rights of holders of all classes of shares outstanding having priority rights to dividends. No dividends have been declared by the Company’s board of directors from inception through January 31, 2022.
Ordinary Shares Reserved for Issuance
The Company had reserved ordinary shares for issuance as follows:
 
  As of
January 31, 2022
As of
April 30, 2021
Stock options issued and outstanding 5,486,883  7,611,016 
RSUs issued and outstanding 4,034,604  3,301,283 
Remaining shares available for future issuance under the 2012 Plan 18,817,211  15,737,819 
Total ordinary shares reserved 28,338,698  26,650,118 
Convertible Preference Shares
The Company's board of directors has the authority, for a period of five years from October 10, 2018, without further action by the Company's shareholders, to issue up to 165 million shares of undesignated convertible preference shares with rights and preferences, including voting rights, designated from time to time by the board of directors. As of January 31, 2022, there were no convertible preference shares issued or outstanding.  
11.Equity Incentive Plans
In September 2012, the Company’s board of directors adopted and the Company’s shareholders approved the 2012 Stock Option Plan, which was amended and restated in September 2018 and further amended in December 2021 (as amended and restated, the “2012 Plan”). Under the 2012 Plan, the board of directors, the compensation committee, as administrator of the 2012 Plan, and a duly authorized committee may grant stock options and other equity-based awards, such as Restricted Stock Awards (“RSAs”) or Restricted Stock Units (“RSUs”), to eligible employees, directors, and consultants to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to employees, directors and consultants, and to promote the success of the Company’s business. The Company’s board of directors, compensation committee or a duly authorized committee determines the vesting schedule for all equity-based awards. Stock options granted to new employees under the 2012 Plan generally vest over four years with 25% of the option shares vesting one year from the vesting commencement date and then ratably over the following 36 months subject to the employees’ continued service to the Company. Refresh grants of stock options to existing employees generally vest monthly over four years subject to the employees’ continued service to the Company. RSUs granted prior to December 8, 2021 to new employees generally vest over a period of four years with 25% vesting on the one-year anniversary of the vesting start date and the remainder vesting semi-annually over the next three years, subject to the employee’s continued service to the Company. RSUs granted prior to December 8, 2021 to existing employees generally vest semi-annually over a period of four years, subject to the employee’s continued service to the Company. RSUs granted to both new and existing employees on and after December 8, 2021 generally
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vest quarterly over a period of four years, subject to the grantee’s continued service to the Company. The Company’s compensation committee may explicitly deviate from the general vesting schedules in its approval of an equity-based award, as it may deem appropriate. Stock options expire ten years after the date of grant. Stock options, RSAs and RSUs that are canceled under certain conditions become available for future grant or sale under the 2012 Plan unless the 2012 Plan is terminated.
The equity awards available for grant were as follows:
  Nine Months Ended
January 31, 2022
Available at beginning of period 15,737,819 
Awards authorized 4,526,699 
Options granted (175,733)
RSUs granted (2,136,065)
Stock options cancelled 358,624 
RSUs cancelled 505,867 
Available at end of period 18,817,211 
Stock Incentive Plans Assumed in Acquisitions
In connection with its acquisitions of Cmd and build.security, the Company assumed certain unvested stock options issued under the Cmd Stock Option Plan and Build 2020 Share Incentive Plan that were outstanding on the date of the respective acquisition. The assumed stock options will continue to be outstanding and will be governed by the provisions of their respective plan and are included in the stock option activity table below.
Stock Options
The following table summarizes stock option activity (in thousands, except share and per share data):
  Stock Options Outstanding
  Number of
Stock Options
Outstanding
Weighted-
Average
Exercise
Price
Remaining
Contractual
Term
(in years)
Aggregate
Intrinsic
Value
Balance as of April 30, 2021 7,611,016  $ 20.34  6.66 $ 768,517 
Stock options assumed in acquisitions 63,846  $ 10.20 
Stock options granted 175,733  $ 128.31 
Stock options exercised (2,004,188) $ 13.70 
Stock options cancelled (358,624) $ 31.70 
Stock options assumed in acquisition cancelled (900) $ 39.68 
Balance as of January 31, 2022 5,486,883  $ 25.37  6.03 $ 387,598 
Exercisable as of January 31, 2022 4,148,435  $ 17.51  5.66 $ 316,800 
 
Stock options exercisable include 29,167 stock options that were unvested as of January 31, 2022.
Aggregate intrinsic value represents the difference between the exercise price of the stock options to purchase ordinary shares and the fair value of the Company’s ordinary shares. The weighted-average grant-date fair value per share of stock options assumed related to the Cmd and build.security acquisitions was $122.13 for the nine months ended January 31, 2022. The weighted-average grant-date fair value per share of stock options granted was $71.17 for each of the three and nine months ended January 31, 2022. The weighted-average grant-date fair value of stock options granted was $83.71 and $78.06 for the three and nine months ended January 31, 2021, respectively.
As of January 31, 2022, the Company had unrecognized stock-based compensation expense of $38.4 million related to unvested stock options that the Company expects to recognize over a weighted-average period of 1.84 years.
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RSUs
The following table summarizes RSU activity for the 2012 Plan:
  Number of
Awards
Weighted-
Average
Grant Date
Fair Value
Outstanding and unvested at April 30, 2021 3,301,283  $ 98.74 
RSUs granted 2,136,065  $ 133.30 
RSUs released (896,877) $ 91.62 
RSUs cancelled (505,867) $ 102.77 
Outstanding and unvested at January 31, 2022 4,034,604  $ 117.60 
As of January 31, 2022, the Company had unrecognized stock-based compensation expense of $438.8 million related to RSUs that the Company expects to recognize over a weighted-average period of 3.06 years.
Stock-Based Compensation Expense
Total stock-based compensation expense recognized in the Company’s condensed consolidated statements of operations was as follows (in thousands):
  Three Months Ended January 31, Nine Months Ended January 31,
  2022 2021 2022 2021
Cost of revenue—cost of subscription—self-managed and SaaS $ 2,064  $ 1,839  $ 6,262  $ 5,065 
Cost of revenue—professional services 1,726  1,359  4,593  3,287 
Research and development 16,029  9,516  41,784  24,309 
Sales and marketing 12,545  8,372  30,798  22,519 
General and administrative 5,029  4,141  14,116  10,125 
Stock-based compensation expense, net of amounts capitalized 37,393  25,227  97,553  65,305 
Capitalized stock-based compensation expense 70  —  152  — 
Total stock-based compensation expense $ 37,463  $ 25,227  $ 97,705  $ 65,305 
Total stock-based compensation expense for the nine months ended January 31, 2022 includes a charge of $0.5 million related to an expense arising from business combinations.
12.Net Loss Per Share Attributable to Ordinary Shareholders
The following table sets forth the computation of basic and diluted net loss per share attributable to ordinary shareholders (in thousands, except share and per share data):
  Three Months Ended January 31, Nine Months Ended January 31,
  2022 2021 2022 2021
Numerator:
Net loss $ (56,726) $ (37,974) $ (138,238) $ (86,133)
Denominator:
Weighted-average shares used in computing net loss per share attributable to ordinary shareholders, basic and diluted 93,015,185  88,341,038  92,140,919  86,296,028 
Net loss per share attributable to ordinary shareholders, basic and diluted $ (0.61) $ (0.43) $ (1.50) $ (1.00)
The following outstanding potentially dilutive ordinary shares were excluded from the computation of diluted net loss per share attributable to ordinary shareholders for the periods presented because the impact of including them would have been antidilutive:
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  Nine Months Ended January 31,
  2022 2021
Stock options 5,486,883  8,494,795 
RSUs 4,034,604  3,345,305 
Contingently issuable shares —  235,031 
Total 9,521,487  12,075,131 
13.Income Taxes
The Company is incorporated in the Netherlands but operates in various countries with differing tax laws and rates. The Company recorded a provision for income taxes of $3.8 million and $1.1 million for the three months ended January 31, 2022 and 2021, respectively and $9.3 million and $2.2 million for the nine months ended January 31, 2022 and 2021, respectively. The provision for income taxes was primarily due to foreign taxes. The calculation of income taxes is based upon the estimated annual effective tax rates for the year applied to the current period loss before tax plus the tax effect of any significant unusual items, discrete events or changes in tax law.
The Company assesses uncertain tax positions in accordance with ASC 740-10, Accounting for Uncertainties in Tax. The Company anticipates that the amount of reasonably possible unrecognized tax benefits that could decrease over the next twelve months due to the expiration of certain statutes of limitations and settlement of tax audits is not material to the Company’s interim unaudited condensed consolidated financial statements.
14.Employee Benefit Plans
The Company has a defined-contribution plan in the U.S. intended to qualify under Section 401 of the Internal Revenue Code (the “401(k) Plan”). The Company has contracted with a third-party provider to act as a custodian and trustee, and to process and maintain the records of participant data. Substantially all the expenses incurred for administering the 401(k) Plan are paid by the Company. This 401(k) Plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. The Company makes contributions to the 401(k) Plan up to 6% of the participating employee’s W-2 earnings and wages. The Company recorded $3.7 million and $2.7 million of expense related to the 401(k) Plan during the three months ended January 31, 2022 and 2021, respectively and $10.8 million and $8.2 million for the nine months ended January 31, 2022 and 2021, respectively.
The Company also has defined-contribution plans in certain other countries for which the Company recorded $1.8 million and $1.5 million of expense during the three months ended January 31, 2022 and 2021, respectively and $5.1 million and $3.8 million for the nine months ended January 31, 2022 and 2021, respectively.  
15.Segment Information
The following table summarizes the Company’s total revenue by geographic area based on the billing address of the customers (in thousands):
  Three Months Ended January 31, Nine Months Ended January 31,
  2022 2021 2022 2021
United States $ 125,831  $ 83,153  $ 344,480  $ 235,188 
Rest of world 98,113  73,962  278,539  195,691 
Total revenue $ 223,944  $ 157,115  $ 623,019  $ 430,879 
Other than the United States, no other individual country exceeded 10% or more of total revenue during the periods presented.
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The following table presents the Company’s long-lived assets, including property and equipment, net, and operating lease right-of-use assets, by geographic region (in thousands):
  As of
January 31, 2022
As of
April 30, 2021
United States $ 19,724  $ 23,443 
United Kingdom 5,303  7,151 
The Netherlands 2,038  2,975 
Rest of world 1,128  776 
Total long-lived assets $ 28,193  $ 34,345 
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Management’s Discussion and Analysis of Financial Condition and Results of Operations and audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended April 30, 2021. As discussed in the section titled “Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such difference include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” under Part II, Item 1A in this Quarterly Report on Form 10-Q. Our fiscal year end is April 30, and our fiscal quarters end on July 31, October 31, January 31, and April 30. Our fiscal year ended April 30, 2021 is referred to as fiscal 2021, and our fiscal year ending April 30, 2022 is referred to as fiscal 2022.
Overview
Elastic is a search company. We deliver technology that enables users to search through massive amounts of structured and unstructured data for a wide range of use cases. Our primary offering is the Elastic Stack, a powerful set of software products that ingest and store data from any source, and in any format, and perform search, analysis, and visualization in milliseconds or less. The Elastic Stack is designed for direct use by developers to power a variety of use cases. We also offer three software solutions – Enterprise Search, Observability, and Security – built on the Elastic Stack. Our solutions are designed to be deployed everywhere: in public or private clouds, in hybrid environments, or in traditional on-premises environments. Our products are used by individual developers and organizations of all sizes across a wide range of industries.
Elasticsearch is the heart of the Elastic Stack. It is a distributed, real-time search and analytics engine and datastore for exploring all types of data including textual, numerical, geospatial, structured, and unstructured. The first public release of Elasticsearch was in 2010 by our co-founder Shay Banon as an open source project. The Company was formed in 2012. Since then, we have added new products, released new features, acquired companies, and created new solutions to expand the functionality of our products.
Our business model is based on a combination of free and paid proprietary software. We market and distribute the Elastic Stack and our solutions using a free and open distribution strategy. Developers are able to download our software directly from our website. Some features of our software can be downloaded and used free of charge. Others are only available through paid subscriptions, which include access to specific proprietary features and also include support. These paid features can be unlocked without the need to re-deploy the software. There is no free subscription tier in our cloud offerings, where all subscriptions are paid.
We believe that our free and open distribution strategy drives a number of benefits for our users, our customers, and our company. It facilitates rapid and efficient developer adoption, particularly by empowering individual developers to download and use our software without payment, registration, or the friction of a formal sales interaction. It fosters a vibrant developer community around our products and solutions, which drives adoption of our products and increased interaction among users. Further, this approach enables community review of our code and products, which allows us to improve the reliability and security of our software.
During the nine months ended January 31, 2022, we acquired 100% of the share capital of Cmd, build.security and Optimyze for a combined total consideration of $134.9 million. With these acquisitions, we will be able to extend cloud security protections for our customers from endpoint to cloud workload and provide our customers with cloud security protections from build-time, to deployment-time, to runtime, and extend our Observability solution to enable “always on” continuous profiling for infrastructure, applications, and services.
We generate revenue primarily from sales of subscriptions for our software. We offer various paid subscription tiers that provide different levels of rights to use proprietary features and access to support. We do not sell support separately. Our subscription agreements for self-managed and Elastic Cloud deployments typically have terms of one to three years and we usually bill for them annually in advance. Elastic Cloud customers may also purchase subscriptions on a month-to-month basis without a commitment, with usage billed at the end of each month. Subscriptions accounted for 93% of total revenue in each of the nine months ended January 31, 2022 and 2021. We also generate revenue from consulting and training services.
We had over 17,900 customers as of January 31, 2022 compared to over 13,800 as of January 31, 2021. We define a customer as an entity that generated revenue in the quarter ending on the measurement date from an annual or month-to-month subscription. Affiliated entities are typically counted as a single customer. The annual contract value (“ACV”) of a customer’s commitments is calculated based on the terms of that customer’s subscriptions, and represents the total committed annual subscription amount as of the measurement date. Month-to-month subscriptions are not included in the calculation of ACV. The
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number of customers who represented greater than $100,000 in ACV was over 890 as of January 31, 2022 compared to over 670 as of January 31, 2021.
We engage in various sales and marketing efforts to extend our free and open distribution model. We employ multi-touch marketing campaigns to nurture our users and customers and keep them engaged after they download our software. Additionally, we maintain direct sales efforts focused on users and customers who have adopted our software, as well as departmental decision-makers and senior executives who have broad purchasing power in their organizations. Our sales teams are primarily segmented by geographies and secondarily by the employee count of our customers. They focus on both initial conversion of users into customers and additional sales to existing customers. In addition to our direct sales efforts, we also maintain partnerships to further extend our reach and awareness of our products around the world.
We continue to make substantial investments in developing the Elastic Stack and our solutions and expanding our global sales and marketing footprint. With a distributed team spanning over 35 countries, we are able to recruit, hire, and retain high-quality, experienced technical and sales personnel and operate at a rapid pace to drive product releases, fix bugs, and create and market new products. We had 2,888 employees as of January 31, 2022.
In July 2021, we issued $575.0 million aggregate principal amount of 4.125% Senior Notes due July 15, 2029 (the “Senior Notes”) in a private placement. We intend to use the net proceeds from the offering of the Senior Notes for general corporate purposes, which may include capital expenditures, investments and working capital. In addition, in the past we have considered, and may continue to consider, acquisitions and strategic transactions, and we may use the net proceeds of this offering for such purposes.
COVID-19
The ongoing COVID-19 pandemic continues to evolve and negatively impact worldwide economic activity. Efforts to control its spread have significantly curtailed the movement of people, goods and services worldwide, including in many of the regions in which we sell our products and services and conduct our business operations, negatively impacting worldwide economic activity. The ongoing impact of the COVID-19 pandemic on our operational and financial performance will depend on certain developments, including the duration and spread of the virus, success of preventative measures to contain or mitigate the spread of the virus and emerging variants, effectiveness, distribution, and acceptance of COVID-19 vaccines, impact on our customers and our sales cycles, impact on our customer, employee or industry events, effect on our vendors, and the uneven impact of the COVID-19 pandemic on certain industries, all of which continue to remain uncertain and cannot be predicted.
The continuing COVID-19 pandemic has resulted in a global slowdown of economic activity and its impact has varied significantly across different industries with certain industries experiencing increased demand for their products and services, while others have struggled to maintain demand for their products and services consistent with historical levels. There have been delays in purchasing decisions from existing and prospective customers, longer sales cycles, delayed implementation of professional services, reduced renewals of subscriptions by existing customers, and changes in approaches to creating sales pipeline in the absence of in-person marketing events, resulting in headwinds for calculated billings and our Net Expansion Rate.
Notwithstanding the potential and actual adverse impacts described above, as the pandemic has caused more of our customers to shift to a virtual workforce or accelerate their digital transformation efforts, we believe the value of our solutions has become even more evident. In addition, we have benefited from lower spending on travel by our employees due to COVID-19 travel restrictions and from holding events virtually, however we expect live events and travel costs to trend back higher in the near-term.
In response to the COVID-19 pandemic and in an effort to focus on maintaining business continuity and preparing for the future and long-term success of our business, we have taken precautionary measures intended to help minimize the risk of the virus to our employees, customers, and the communities in which we operate, including modifying our business practices, such as suspending employee travel, adapting employee work locations, and holding events and trainings virtually. Further, we also temporarily reduced the pace of investments in our business in response to the COVID-19 pandemic in the first quarter of fiscal 2021 but began to gradually increase our investments in our business since then. We intend to continue to maintain a similar pace of investments in the business throughout the remainder of fiscal 2022. We continue to monitor the major impacts of the COVID-19 pandemic and make changes in our business as appropriate, in response to such impacts. See “Risk Factors” included in Part II, Item 1A of this Quarterly Report on Form 10-Q for a discussion of additional risks.
Key Factors Affecting Our Performance
We believe that the growth and future success of our business depends on many factors, including those described below. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to sustain our growth and improve our results of operations.
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Growing the Elastic community. Our strategy consists of providing access to source available software, on both a free and paid basis, and fostering a community of users and developers. Our strategy is designed to pursue what we believe to be significant untapped potential for the use of our technology. After developers begin to use our software and start to participate in our developer community, they become more likely to apply our technology to additional use cases and evangelize our technology within their organizations. This reduces the time required for our sales force to educate potential leads on our solutions. In order to capitalize on our opportunity, we intend to make further investments to keep the Elastic Stack accessible and well known to software developers around the world. We intend to continue to invest in our products and support and engage our user base and developer community through content, events, and conferences in the U.S. and internationally. Our results of operations may fluctuate as we make these investments.
Developing new features for the Elastic Stack. The Elastic Stack is applied to various use cases by customers, including through the solutions we offer. Our revenue is derived primarily from subscriptions of Enterprise Search, Observability and Security built into the Elastic Stack. We believe that releasing additional features of the Elastic Stack, including our solutions, drives usage of our products and ultimately drives our growth. To that end, we plan to continue to invest in building new features and solutions that expand the capabilities of the Elastic Stack. These investments may adversely affect our operating results prior to generating benefits, to the extent that they ultimately generate benefits at all.
Growing our customer base by converting users of our software to paid subscribers. Our financial performance depends on growing our paid customer base by converting free users of our software into paid subscribers. Our distribution model has resulted in rapid adoption by developers around the world. We have invested, and expect to continue to invest, heavily in sales and marketing efforts to convert additional free users to paid subscribers. Our investment in sales and marketing is significant given our large and diverse user base. The investments are likely to occur in advance of the anticipated benefits resulting from such investments, such that they may adversely affect our operating results in the near term.
Expanding within our current customer base. Our future growth and profitability depend on our ability to drive additional sales to existing customers. Customers often expand the use of our software within their organizations by increasing the number of developers using our products, increasing the utilization of our products for a particular use case, and expanding use of our products to additional use cases. We focus some of our direct sales efforts on encouraging these types of expansion within our customer base.
We believe that a useful indication of how our customer relationships have expanded over time is through our Net Expansion Rate, which is based upon trends in the rate at which customers increase their spend with us. To calculate an expansion rate as of the end of a given month, we start with the annualized spend from all such customers as of twelve months prior to that month end, or Prior Period Value. A customer’s annualized spend is measured as their ACV, or in the case of customers charged on usage-based arrangements, by annualizing the usage for that month. We then calculate the annualized spend from these same customers as of the given month end, or Current Period Value, which includes any growth in the value of their subscriptions or usage and is net of contraction or attrition over the prior twelve months. We then divide the Current Period Value by the Prior Period Value to arrive at an expansion rate. The Net Expansion Rate at the end of any period is the weighted average of the expansion rates as of the end of each of the trailing twelve months. The Net Expansion Rate includes the dollar-weighted value of our subscriptions or usage that expand, renew, contract, or attrit. For instance, if each customer had a one-year subscription and renewed its subscription for the exact same amount, then the Net Expansion Rate would be 100%. Customers who reduced their annual subscription dollar value (contraction) or did not renew their annual subscription (attrition) would adversely affect the Net Expansion Rate. Our Net Expansion Rate was slightly below 130% for the three months ended January 31, 2022. Until April 30, 2021, Net Expansion Rate was based on ACV, regardless of customers’ actual usage, and also did not include customers on month-to-month subscriptions. To better reflect actual customer behavior, we modified our Net Expansion Rate calculation to incorporate customers’ actual spending patterns and include customers on month-to-month subscriptions. The impact of this change on prior reported periods is immaterial.
As large organizations expand their use of the Elastic Stack across multiple use cases, projects, divisions and users, they often begin to require centralized provisioning, management and monitoring across multiple deployments. To satisfy these requirements, our Enterprise subscription tier provides access to key orchestration and deployment management capabilities. We will continue to focus some of our direct sales efforts on driving adoption of our paid offerings.
Increasing adoption of Elastic Cloud. Elastic Cloud, our family of hosted offerings that includes Elasticsearch Service and Site Search Service, is an important growth opportunity for our business. Organizations are increasingly looking for hosted deployment alternatives with reduced administrative burdens. In some cases, users of our source available software that have been self-managing deployments of the Elastic Stack subsequently become paying subscribers of Elastic Cloud. Elastic Cloud contributed 34% and 27% to our total revenue for the nine months ended January 31, 2022 and 2021, respectively. We believe that offering a hosted deployment alternative is important for achieving our long-term growth potential, and we expect Elastic Cloud’s contribution to our subscription revenue to increase over time. However, we expect that an increase in the relative contribution of Elastic Cloud to our business will have a modest adverse impact on our gross margin as a result of the associated third-party hosting costs.
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Components of Results of Operations
Revenue
Subscription. Our revenue is primarily generated through the sale of subscriptions to software, which is either self-managed by the user or hosted and managed by us in the cloud. Subscriptions provide the right to use paid proprietary software features and access to support for our paid and unpaid software.
A portion of the revenue from self-managed subscriptions is generally recognized up front at the point in time when the license is delivered. This revenue is presented as License – self-managed in our consolidated statements of operations. The remainder of revenue from self-managed subscriptions is recognized ratably over the subscription term while revenue from subscriptions that require access to the cloud or that are hosted and managed by us or by a partner on our behalf in the cloud is recognized ratably over the subscription term or on a usage basis; both are presented within Subscription – self-managed and SaaS in our consolidated statements of operations.
Professional services. Professional services is composed of consulting services as well as public and private training. Consulting services are generally time-based arrangements. Revenue for professional services is recognized as these services are performed.
Cost of Revenue
Subscription. Cost of license self-managed consists of amortization of certain intangible assets. Cost of subscription – self-managed and SaaS consists primarily of personnel and related costs for employees associated with supporting our subscription arrangements, certain third-party expenses, and amortization of certain intangible and other assets. Personnel and related costs, or personnel costs, comprise cash compensation, benefits and stock-based compensation to employees, costs of third-party contractors, and allocated overhead costs. Third-party expenses consist of cloud hosting costs and other expenses directly associated with our customer support. We expect our cost of subscription – self-managed and SaaS to increase in absolute dollars as our subscription revenue increases.
Professional services. Cost of professional services revenue consists primarily of personnel costs directly associated with delivery of training, implementation and other professional services, costs of third-party contractors, facility rental charges and allocated overhead costs. We expect our cost of professional services revenue to increase in absolute dollars as we invest in our business and as professional services revenue increases.
Gross profit and gross margin. Gross profit represents revenue less cost of revenue. Gross margin, or gross profit as a percentage of revenue, has been and will continue to be affected by a variety of factors, including the timing of our acquisition of new customers and our renewals with existing customers, the average sales price of our subscriptions and professional services, the amount of our revenue represented by hosted services, the mix of subscriptions sold, the mix of revenue between subscriptions and professional services, the mix of professional services between consulting and training, transaction volume growth and support case volume growth. We expect our gross margin to fluctuate over time depending on the factors described above. We expect our revenue from Elastic Cloud to continue to increase as a percentage of total revenue, which we expect will adversely impact our gross margin as a result of the associated hosting costs.
Operating Expenses
Research and development. Research and development expense mainly consists of personnel costs and allocated overhead costs for employees and contractors. We expect our research and development expense to increase in absolute dollars for the foreseeable future as we continue to develop new technology and invest further in our existing products.
Sales and marketing. Sales and marketing expense mainly consists of personnel costs, commissions, allocated overhead costs and costs related to marketing programs and user events. Marketing programs consist of advertising, events, brand-building and customer acquisition and retention activities. We expect our sales and marketing expense to increase in absolute dollars as we expand our salesforce and increase our investments in marketing resources. We capitalize sales commissions and associated payroll taxes paid to internal sales personnel that are related to the acquisition of customer contracts. Sales commissions costs are amortized over the expected benefit period.
General and administrative. General and administrative expense mainly consists of personnel costs for our management, finance, legal, human resources, and other administrative employees. Our general and administrative expense also includes professional fees, accounting fees, audit fees, tax services and legal fees, as well as insurance, allocated overhead costs, and other corporate expenses. We expect our general and administrative expense to increase in absolute dollars as we
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increase the size of our general and administrative functions to support the growth of our business. We also anticipate that we will continue to incur additional costs for employees and third-party consulting services related to operating as a public company.
Other Income (Expense), Net
Other income, net primarily consists of gains and losses from transactions denominated in a currency other than the functional currency, interest income and interest expense.
Provision for Income Taxes
Provision for income taxes consists primarily of income taxes related to the Netherlands, U.S. federal, state and foreign jurisdictions in which we conduct business. Our effective tax rate is affected by recurring items, such as tax rates in jurisdictions outside the Netherlands and the relative amounts of income we earn in those jurisdictions, and non-deductible stock-based compensation.
Results of Operations
The period to period comparison of results is not necessarily indicative of results for future periods. The following tables set forth our results of operations for the periods presented in dollars:
  Three Months Ended January 31, Nine Months Ended January 31,
  2022 2021 2022 2021
  (in thousands)
Revenue    
License - self-managed $ 20,119  $ 15,280  $ 54,457  $ 45,673 
Subscription - self-managed and SaaS 189,495  131,969  522,599  357,127 
Total subscription revenue 209,614  147,249  577,056  402,800 
Professional services 14,330  9,866  45,963  28,079 
Total revenue 223,944  157,115  623,019  430,879 
Cost of revenue (1)(2)(3)
   
Cost of license - self-managed 501  346  1,242  1,039 
Cost of subscription - self-managed and SaaS 47,076  31,426  126,097  86,464 
Total cost of revenue - subscription 47,577  31,772  127,339  87,503 
Cost of professional services 13,707  10,196  37,491  27,744 
Total cost of revenue 61,284  41,968  164,830  115,247 
Gross profit 162,660  115,147  458,189  315,632 
Operating expenses(1)(2)(3)(4)
   
Research and development 71,749  51,400  194,894  143,766 
Sales and marketing 105,069  71,087  288,055  191,712 
General and administrative 31,691  27,121  89,298  72,555 
Total operating expenses 208,509  149,608  572,247  408,033 
Operating loss (1)(2)(3)(4)
(45,849) (34,461) (114,058) (92,401)
Other income (expense), net
Interest expense (6,175) (65) (14,327) (78)
Other income (expense), net (861) (2,312) (509) 8,502 
Loss before income taxes (52,885) (36,838) (128,894) (83,977)
Provision for income taxes 3,841  1,136  9,344  2,156 
Net loss $ (56,726) $ (37,974) $ (138,238) $ (86,133)
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(1) Includes stock-based compensation expense as follows:
  Three Months Ended January 31, Nine Months Ended January 31,
  2022 2021 2022 2021
(in thousands)
Cost of revenue    
Cost of subscription - self managed and SaaS $ 2,064  $ 1,839  $ 6,262  $ 5,065 
Cost of professional services 1,726  1,359  4,593  3,287 
Research and development 16,029  9,516  41,784  24,309 
Sales and marketing 12,545  8,372  30,798  22,519 
General and administrative 5,029  4,141  14,116  10,125 
Total stock-based compensation expense $ 37,393  $ 25,227  $ 97,553  $ 65,305 
(2) Includes employer payroll taxes on employee stock transactions as follows:
  Three Months Ended January 31, Nine Months Ended January 31,
  2022 2021 2022 2021
  (in thousands)
Cost of revenue
Cost of subscription - self managed and SaaS $ 147  $ 267  $ 474  $ 487 
Cost of professional services 113  322  591  424 
Research and development 663  1,243  2,916  2,702 
Sales and marketing 512  1,723  3,874  3,494 
General and administrative 208  2,130  779  3,329 
Total employer payroll taxes on employee stock-based transactions
$ 1,643  $ 5,685  $ 8,634  $ 10,436 
(3) Includes amortization of acquired intangible assets as follows:
  Three Months Ended January 31, Nine Months Ended January 31,
  2022 2021 2022 2021
  (in thousands)
Cost of revenue
Cost of license - self-managed $ 501  $ 346  $ 1,242  $ 1,039 
Cost of subscription - self-managed and SaaS 2,545  1,764  6,314  5,289 
Sales and marketing 1,231  1,428  4,088  4,302 
Total amortization of acquired intangibles $ 4,277  $ 3,538  $ 11,644  $ 10,630 
(4) Includes acquisition-related expenses as follows:
  Three Months Ended January 31, Nine Months Ended January 31,
  2022 2021 2022 2021
(in thousands)
Research and development $ 2,713  $ —  $ 3,695  $ — 
General and administrative 18  —  1,304  — 
Total acquisition-related expenses $ 2,731  $ —  $ 4,999  $ — 
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The following table sets forth selected condensed consolidated statements of operations data for each of the periods indicated as a percentage of total revenue:
  Three Months Ended January 31, Nine Months Ended January 31,
  2022 2021 2022 2021
Revenue    
License - self-managed % 10  % % 10  %
Subscription - self-managed and SaaS 85  % 84  % 84  % 83  %
Total subscription revenue 94  % 94  % 93  % 93  %
Professional services % % % %
Total revenue 100  % 100  % 100  % 100  %
Cost of revenue (1)(2)(3)
 
Cost of license - self-managed % % % %
Cost of subscription - self-managed and SaaS 21  % 20  % 20  % 20  %
Total cost of revenue - subscription 21  % 20  % 20  % 20  %
Cost of professional services % % % %
Total cost of revenue 27  % 27  % 26  % 27  %
Gross profit